Lately, we’ve been hearing a recurring question from our customers and prospects: Is the EU Transfer of Funds Regulation (TFR) being postponed by six months? Let’s set the record straight.

The short answer: No, the TFR is not being delayed.

Understanding the Source of the Confusion

This misunderstanding likely stems from recent discussions around MiCA (Markets in Crypto-Assets) regulatory technical standards (RTS). As members of BlockchainForEurope, we’ve joined others in addressing concerns about MiCA’s RTS and its implementation timeline. The letter we co-signed with other industry members highlights several key challenges that MiCA introduces, including:

1. Timing and Legal Uncertainty: With less than two months left before MiCA’s application on December 30, 2024, delays in RTS adoption have left both national competent authorities (NCAs) and CASPs scrambling to prepare.
2. Inconsistent Transitional Periods: Divergent “grandfathering” clauses across Member States create a compliance patchwork—5 months in Lithuania versus 18 months in France—undermining the intended harmonization.
3. Foreseeable Delays and Risks: Without coordinated measures, we risk regulatory uncertainty, market disruptions, and reputational harm, detracting from MiCA’s goals.
4. Operational Challenges: CASPs face impractical requirements, such as applying in all Member States, while some states have ceased accepting pre-MiCA applications.
5. Proposed Mitigations: The letter calls for ESMA to issue a “no action” letter to promote consistency among NCAs and extend transitional arrangements.

How Does This Relate to TFR?

It’s crucial to understand that MiCA and TFR are separate regulations. While MiCA includes transitional or “grandfathering” clauses for existing CASPs, the TFR does not.

For TFR, there is no "traditional" transitional period. Under the EBA Travel Rule Guidelines, until July 31, 2025, CASPs may exceptionally use infrastructures or services with technical limitations, but are required to implement additional technical steps to ensure full compliance with the requirements. This does not exempt them from Travel Rule compliance. CASPs using such infrastructures are required to take additional technical steps to ensure full compliance with the Travel Rule during this period. This means that all existing CASPs, regardless of their new status, must fully comply with the TFR requirements by the official application date. Any delays or mitigations proposed under MiCA will not directly impact TFR timelines.

Failing to comply with the TFR by the December 30, 2024, deadline carries serious consequences, including the potential for service disruptions, reputational damage, and regulatory penalties. We recently explored this topic in detail in our article: The Consequences of Non-Compliance with the EU’s Travel Rule After December 30th. If you’re preparing for compliance, it’s worth a read.

At Notabene, we’re committed to helping businesses navigate these regulatory complexities. If you have questions or concerns about preparing for the TFR, we’re here to help. Feel free to reach out to our Regulatory & Compliance team at [email protected]